Real Estate Investor Magazine July/ Aug 2020 July 2020 | Page 7

EDITORIAL VIEW Property winners & losers during lockdown T he global economy has changed drastically in the last four months as a result of lockdown and Cocid-19 with unemployment up, companies closing down, and in property both residential and commercial sectors, landlords have implemented rent holidays or deferments with all types of adjustments to keep afloat. However, despite the incredible challenges many new businesses will thrive and survive and even will come out on top out of this pandemic. Rob Kane, property developer and CEO of Boxwood Property Fund says, “we need to work together to find ways to support one another as we can expect another three to five years of tough times ahead,” notes Kane who is also chairman of the Cape Town central City Improvement District. The first stage of lockdown level-5 has hit most of property industry hard and we will continue to see the knock-on effects long after lockdown ends and there will many losers but also winners. Real estate is still a great way grow financial independence. Dr Andrew Golding, chief executive of the Pam Golding Property group says, “Having been isolated in the confines of our homes for a substantial period of time is prompting many homeowners to review the way they live – not only from an economic perspective, given the recessionary environment, but also in terms of a realisation as to what is really important in their lives. And this includes their homes, whether owned or rented. However, with the right guidance, planning and knowledge, it’s also an excellent time to snap up amazing bargains and once-in-a-lifetime properties that may be high-risk in the current market, but have the potential to deliver incredible future returns.” One of the big upsides for the entry-level residential sector to come out of Covid-19 has been the 2% interest rate reduction. South Africa has bucked global trends with a prime interest rate standing at 7.25% which representing a 47-year low. The question is, what impact will this have on the real estate market in South Africa? “For instance, we are already seeing more cash buyers – including investors, returning to the marketplace, capitalising on opportunities to acquire value-for-money residential properties in the current buyers’ market, including those up to R1 million which require zero transfer duty. There has also been a spike in offshore investment with South Africa investors moving more heavily into offshore assets and invest property in countries like the UK, Portugal, United States, Mauritius and other European destinations. Many high net worth investors have lost confidence in the South African economy which has been struggling with downgrades to junk status and mismanagement. Many investors want to protect themselves against the volatile rand, political uncertainty and an economy that has contracted more than 7% already. It would be a mistake to look at the entire real estate industry through a single lens as we are seeing pockets of success despite Covid-19 and lockdown restrictions. There are clear winners to come out of Covid-19 in the digital economy, e-commerce and related property digital services. Also doing well are aligned businesses such as data centres, logistics assets for product delivery and supply chain, warehousing and storage in the industrial sector. Interestingly the latest Bloomberg Billionaires index ranking of the world’s richest people shows that seven out of the top ten billionaires in the world are in technology, with Warren Buffett moving from third wealthiest to eighth wealthiest. Stay safe & successful investing. NEALE PETERSEN EDITOR-IN-CHIEF MICHAEL DELL “Technology now allows people to connect anytime, anywhere, to anyone in the world, from almost any device. This is dramatically changing the way people work, facilitating 24/7 collaboration with colleagues who are dispersed across time zones, countries, and continents.” EMAIL [email protected] FaceBook LIVE REAL ESTATE RADIO PodCasts SA Real Estate Investor Magazine JULY/AUGUST 2020 3